Question 1

An example of discretionary fiscal policy would be

Accepted Answer

A) the existence of the welfare state. 
B) the existence of the progressive federal income tax. 
C) a federal jobs program adopted to stimulate consumption. 
D) an interest rate cut implemented to stimulate consumption. 
A) the existence of the welfare state. 
B) the existence of the progressive federal income tax. 
C) a federal jobs program adopted to stimulate consumption. 
D) an interest rate cut implemented to stimulate consumption. C

Question 2

Which of the following would qualify as an aggregate demand shock?

Accepted Answer

A) An unexpected increase in oil prices 
B) A seasonally expected increase in oil prices 
C) An unexpected reduction in consumer confidence 
D) An anticipated tax cut 
A) An unexpected increase in oil prices 
B) A seasonally expected increase in oil prices 
C) An unexpected reduction in consumer confidence 
D) An anticipated tax cut C

Question 3

If you were to use an Aggregate Supply Aggregate Demand diagram to model nondiscretionary and discretionary fiscal policy in reaction to a negative aggregate demand shock, you would see the aggregate demand curve move

Accepted Answer

A) to the right as a result of the shock. 
B) to the left as a result of the shock. 
C) back toward its pre-shock position as a result of these policies. 
D) to the left, back toward its pre-shock position as a result of these policies. 
A) to the right as a result of the shock. 
B) to the left as a result of the shock. 
C) back toward its pre-shock position as a result of these policies. 
D) to the left, back toward its pre-shock position as a result of these policies. D

Question 4

A recent example of the administrative lag came in the form of it taking

Accepted Answer

A) several months in 2003 for Congress to agree on a specific tax cut package even after they had agreed on having one. 
B) only a month or two from the passage of the 2003 tax cut to the issuance to rebate checks. 
C) until Summer 2003 to recognize that the recession of 2001 ended in December of 2001. 
D) very little time for the effects of the 2003 rebate checks to have an effect on the economy. 
A) several months in 2003 for Congress to agree on a specific tax cut package even after they had agreed on having one. 
B) only a month or two from the passage of the 2003 tax cut to the issuance to rebate checks. 
C) until Summer 2003 to recognize that the recession of 2001 ended in December of 2001. 
D) very little time for the effects of the 2003 rebate checks to have an effect on the economy.

Question 5

Which of the following would be described as the operational lag?

Accepted Answer

A) The time required to know that there is a recession. 
B) The time required to agree upon a policy remedy for a recession. 
C) The time required to get a particular plan implemented with the money getting into peoples' hands. 
D) Both the time required to know that there is a recession and agree upon a policy remedy for a recession. 
A) The time required to know that there is a recession. 
B) The time required to agree upon a policy remedy for a recession. 
C) The time required to get a particular plan implemented with the money getting into peoples' hands. 
D) Both the time required to know that there is a recession and agree upon a policy remedy for a recession.

Question 6

A political leader suggesting that an economic downturn will be cushioned automatically is referring to

Accepted Answer

A) Monetary policy 
B) Discretionary Fiscal Policy 
C) Nondiscretionary Fiscal Policy 
D) Tax policy changes 
A) Monetary policy 
B) Discretionary Fiscal Policy 
C) Nondiscretionary Fiscal Policy 
D) Tax policy changes

Question 7

The portion of the Obama stimulus package that increased spending is best thought of as

Accepted Answer

A) nondiscretionary fiscal policy. 
B) discretionary (and expansionary)fiscal policy. 
C) discretionary (and contractionary)fiscal policy. 
D) monetary policy. 
A) nondiscretionary fiscal policy. 
B) discretionary (and expansionary)fiscal policy. 
C) discretionary (and contractionary)fiscal policy. 
D) monetary policy.

Question 8

The arguments that the Obama administration used to justify the stimulus plan are

Accepted Answer

A) consistent with the theory expressed in the chapter's discussion of discretionary fiscal policy. 
B) inconsistent with the theory expressed in the chapter's discussion of discretionary fiscal policy. 
C) consistent with the discussion of expansionary bias. 
D) consistent with the discussion of politically-motivated actions taken by the powerful. 
A) consistent with the theory expressed in the chapter's discussion of discretionary fiscal policy. 
B) inconsistent with the theory expressed in the chapter's discussion of discretionary fiscal policy. 
C) consistent with the discussion of expansionary bias. 
D) consistent with the discussion of politically-motivated actions taken by the powerful.

Question 9

A political leader suggesting that the country "stay the course" in the face of an economic downturn because things will be potentially made worse if tax and spending policies are adopted, is, by implication suggesting ____ is better.

Accepted Answer

A) Trade policy 
B) Discretionary Fiscal Policy 
C) Nondiscretionary Fiscal Policy 
D) Regulatory changes 
A) Trade policy 
B) Discretionary Fiscal Policy 
C) Nondiscretionary Fiscal Policy 
D) Regulatory changes

Question 10

An example of discretionary fiscal policy would be

Accepted Answer

A) the operation of the welfare state. 
B) the operation of the progressive federal income tax. 
C) a tax cut adopted to stimulate consumption. 
D) an interest rate cut implemented to stimulate consumption. 
A) the operation of the welfare state. 
B) the operation of the progressive federal income tax. 
C) a tax cut adopted to stimulate consumption. 
D) an interest rate cut implemented to stimulate consumption.

Question 11

A recent example of the recognition lag came in the form of it taking

Accepted Answer

A) several months in 2003 for Congress to agree on a tax cut package even after they had agreed on having one. 
B) only a month or two from the passage of the 2003 tax cut to the issuance to rebate checks. 
C) until Fall 2001 to recognize that the recession of 2001 had started in January 2001. 
D) very little time for the effects of the 2003 rebate checks to have an effect on the economy. 
A) several months in 2003 for Congress to agree on a tax cut package even after they had agreed on having one. 
B) only a month or two from the passage of the 2003 tax cut to the issuance to rebate checks. 
C) until Fall 2001 to recognize that the recession of 2001 had started in January 2001. 
D) very little time for the effects of the 2003 rebate checks to have an effect on the economy.

Question 12

Real economic growth during the first two years of President George W. Bush's second term was

Accepted Answer

A) approximately 8.7% per year. 
B) higher than real economic growth during the first two years of President Bill Clinton's second term. 
C) approximately 3.2% per year. 
D) negative because of the 2001 recession. 
A) approximately 8.7% per year. 
B) higher than real economic growth during the first two years of President Bill Clinton's second term. 
C) approximately 3.2% per year. 
D) negative because of the 2001 recession.

Question 13

Which of the following would qualify as an aggregate supply shock?

Accepted Answer

A) An unexpected increase in oil prices 
B) A seasonally expected increase in oil prices 
C) An unexpected reduction in consumer confidence 
D) An anticipated tax cut 
A) An unexpected increase in oil prices 
B) A seasonally expected increase in oil prices 
C) An unexpected reduction in consumer confidence 
D) An anticipated tax cut

Question 14

A political problem with discretionary fiscal policy is the

Accepted Answer

A) contractionary bias. 
B) expansionary bias. 
C) big-state bias. 
D) overreaction bias. 
A) contractionary bias. 
B) expansionary bias. 
C) big-state bias. 
D) overreaction bias.

Question 15

Tax rebates such as those approved in 2003 might be

Accepted Answer

A) spent on consumption goods. 
B) saved in the form of increased bank account balances. 
C) used to pay down existing consumer debt. 
D) all of the options are correct. 
A) spent on consumption goods. 
B) saved in the form of increased bank account balances. 
C) used to pay down existing consumer debt. 
D) all of the options are correct.

Question 16

A political problem with discretionary fiscal policy is the

Accepted Answer

A) contractionary bias. 
B) big-state bias. 
C) expansionary bias. 
D) overreaction bias. 
A) contractionary bias. 
B) big-state bias. 
C) expansionary bias. 
D) overreaction bias.

Question 17

If you were to use an Aggregate Supply Aggregate Demand diagram to model nondiscretionary and discretionary fiscal policy in reaction to a positive aggregate demand shock, you would see the aggregate demand curve move

Accepted Answer

A) to the right as a result of the shock. 
B) to the left as a result of the shock. 
C) back toward its pre-shock position as a result of these policies. 
D) to the right, back toward its pre-shock position as a result of these policies. 
A) to the right as a result of the shock. 
B) to the left as a result of the shock. 
C) back toward its pre-shock position as a result of these policies. 
D) to the right, back toward its pre-shock position as a result of these policies.

Question 18

An example of nondiscretionary fiscal policy would be

Accepted Answer

A) the existence of the progressive federal income tax. 
B) a federal jobs program adopted to stimulate consumption. 
C) a tax cut adopted to stimulate consumption. 
D) an interest rate cut implemented to stimulate consumption. 
A) the existence of the progressive federal income tax. 
B) a federal jobs program adopted to stimulate consumption. 
C) a tax cut adopted to stimulate consumption. 
D) an interest rate cut implemented to stimulate consumption.

Question 19

President Obama's 2009 fiscal stimulus package included

Accepted Answer

A) tax increases for individuals. 
B) a reduction in unemployment benefits. 
C) increased federal borrowing from state and local governments. 
D) increased spending on "shovel-ready" infrastructure projects. 
A) tax increases for individuals. 
B) a reduction in unemployment benefits. 
C) increased federal borrowing from state and local governments. 
D) increased spending on "shovel-ready" infrastructure projects.

Question 20

The portion of the Obama stimulus package that cut taxes is best thought of as

Accepted Answer

A) nondiscretionary fiscal policy. 
B) discretionary (and expansionary)fiscal policy. 
C) discretionary (and contractionary)fiscal policy. 
D) monetary policy. 
A) nondiscretionary fiscal policy. 
B) discretionary (and expansionary)fiscal policy. 
C) discretionary (and contractionary)fiscal policy. 
D) monetary policy.

Exam 9: Fiscal Policy

An example of discretionary fiscal policy would be

Which of the following would qualify as an aggregate demand shock?

If you were to use an Aggregate Supply Aggregate Demand diagram to model nondiscretionary and discretionary fiscal policy in reaction to a negative aggregate demand shock, you would see the aggregate demand curve move

A recent example of the administrative lag came in the form of it taking

Which of the following would be described as the operational lag?

A political leader suggesting that an economic downturn will be cushioned automatically is referring to

The portion of the Obama stimulus package that increased spending is best thought of as

The arguments that the Obama administration used to justify the stimulus plan are

A political leader suggesting that the country "stay the course" in the face of an economic downturn because things will be potentially made worse if tax and spending policies are adopted, is, by implication suggesting ____ is better.

An example of discretionary fiscal policy would be

A recent example of the recognition lag came in the form of it taking

Real economic growth during the first two years of President George W. Bush's second term was

Which of the following would qualify as an aggregate supply shock?

A political problem with discretionary fiscal policy is the

Tax rebates such as those approved in 2003 might be

A political problem with discretionary fiscal policy is the

If you were to use an Aggregate Supply Aggregate Demand diagram to model nondiscretionary and discretionary fiscal policy in reaction to a positive aggregate demand shock, you would see the aggregate demand curve move

An example of nondiscretionary fiscal policy would be

President Obama's 2009 fiscal stimulus package included

The portion of the Obama stimulus package that cut taxes is best thought of as

Economics: the Study of Opportunity Cost

Supply and Demand

The Concept of Elasticity and Consumer and Producer Surplus

Firm Production, Cost, and Revenue

Perfect Competition, Monopoly, and Economic Versus Normal Profit

Every Macroeconomic Word You Ever Heard: Gross Domestic Product, Inflation, Unemployment, Recession, Depression

Interest Rates and Present Value

Aggregate Demand and Aggregate Supply

Monetary Policy

Federal Spending

Federal Deficits, Surpluses, and the National Debt

The Housing Bubble

The Recession of 2007-2009: Causes and Policy Responses

Is Economic Stagnation the New Normal

Is the Fiscalsky Falling: An Examination of Unfunded Social Security, Medicare, and State and Local Pension Liabilities

International Trade: Does It Jeopardize American Jobs

International Finance and Exchange Rates

The European Debt Crisis

Economic Growth and Development

Nafta, Gatt, Wto: Are Trade Agreements Good for Us

The Line Between Legal and Illegal Goods

Natural Resources, the Environment, and Climate Change

Health Care

Government-Provided Health Insurance: Medicaid, Medicare, and the Child Health Insurance Program

The Economics of Prescription Drugs

So You Want to Be a Lawyer: Economics and the Law

The Economics of Crime

Antitrust

The Economics of Race and Discrimination

Income and Wealth Inequality

Farm Policy

Minimum Wage

Ticket Brokers and Ticket Scalping

Rent Control

Economics of K-12 Education

Economics of College and University Education

Poverty and Welfare

Head Start

Social Security

Personal Income Taxes

Energy Prices

If We Build It, Will They Come and Other Sports Questions

The Stock Market Crashes

Unions

Walmart: Always Low Prices and Low Wages- Always

The Economic Impact of Casino Gambling

The Economics of Terrorism

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